General Comments:
Limited cash cattle trade developed as of late Wednesday with prices generally steady to $1 per cwt higher from week ago levels. It appears that packers will need to secure at least additional light trade before the end of the week in order to put themselves in a good position over the next couple of weeks as they secure current procurement schedules going into the month of December. But the activity level on Friday after Thanksgiving is always uncertain as to just how much interest either side will have to move back into the market. Cash cattle trade seen Wednesday was listed at $109 to $111 live (mostly $110 to $111) and $171 to $174 dressed (mostly $172 and higher). The combination of elevated boxed beef values through the week combined with active support in live cattle futures is expected to help support underlying cash trade moving into the weekend despite quiet markets. Futures trade is likely to remain sluggish as most traders are either still out for the holiday or remain on the sidelines as they have already adjusted positions until more active volume moves back into the complex. This should keep price moves uneventful. But the concern with these holiday schedule trading sessions is that volatile market swings can easily develop due to the limited activity.
Lean hog futures have rallied higher in the last week with spot February futures holding above $67 per cwt. This is a $4 per cwt rally from setting fall lows last week and is in a position to test November highs of $68.47 per cwt before the end of the month. Trade Friday is expected to remain subdued due to limited trade and a shortened trading session. Without any unforeseen market shifts, lean hog trade could wander within a narrow trading range during the entire day. Most traders are expected to wait until next week before adjusting to technical of fundamental market shifts, which could help support the recent market shifts through nearby and deferred contracts. Cash hog prices are expected $1 lower to $1 higher with most bids expected steady 50 cents lower. Slaughter Friday is expected at 478,000 head. Saturday runs are expected at 379,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | Firming cash cattle markets were seen late Wednesday before the holiday break, with additional potential gains developing Friday as packers are expected to need at least some additional trade going into next week. |
1) | Extremely limited holiday trade volume may hinder futures and cash market trade Friday with most traders absent from the market Friday and futures markets trading on a shortened schedule. |
| 2) | Active gains in feeder cattle futures continue to spark positive momentum in the complex. January feeder cattle futures have rallied $6 per cwt over the last week, putting trade in a position to test short-term resistance levels of $140.72 per cwt before the end of the week. |
2) | Light holiday volume always creates the risk of wide, unusual market swings which have little fundamental or technical merit but based solely on the lack of volume in the market and potential to manipulate market prices based on lack of activity. |
| 3) | Firm gains have redeveloped in pork cutout values heading into the weekend. This is helping to drive additional buyer support into nearby lean hog contracts in late November. |
3) | Pork packers continue to have aggressive expectations for Friday and Saturday processing schedules. These numbers are needed to keep the market current and make up for remaining dark on Thursday. But in order to sustain these elevated holiday schedules depends on active employee participation through the entire weekend. If employee numbers are reduced, plant speeds will significantly suffer for the week. |
| 4) | A move above $67.67 per cwt in spot February futures would break through resistance levels, likely sparking additional technical buyer support through the end of the year. |
4) | With nearby lean hog futures surging over $4 per cwt over the last week, the lean hog complex is ripe for a moderate price correction. The limited trade volume Friday could bring about pressure in nearby and deferred contracts with little underlying direction from fundamental market factors. |
 |
| #completecalfcare |
No comments:
Post a Comment